But in the bond market, Treasury prices slipped after the announcement and the dollar remained weaker versus other major currencies.

After the close, Texas Instruments (Research) reported higher quarterly earnings and revenue that topped forecasts. However, the chipmaker also issued a fourth-quarter revenue forecast that sets the midpoint below analysts' forecasts, and shares slipped four percent in extended-hours trading.

Earnings are due from DuPont (Research), HCA (Research) and others Tuesday morning. Tuesday also brings reads on existing home sales and consumer confidence.

Gains accelerated in the late morning on rumors that Bernanke would be the White House's nominee to replace Greenspan. The Bush administration confirmed Bernanke's nomination at around 1 p.m. ET. (Full story).

"The bottom line for the markets is just relief," said Stephen Stanley, chief economist at RBS Greenwich Capital. "We've gotten it out of the way now, it's someone we know, not someone from left field. It's the safest choice the Bush administration could have made." (Full story).

Bernanke -- who was a Fed governor until June -- was widely considered the front runner for the job and is someone seen as carrying on Greenspan's inflation-fighting policies.

What is more of a question for the markets now and in the months ahead is how Bernanke will lead, Stanley said. Namely, will he be consensus-oriented or more autocratic? Will he win the markets over the way Greenspan has?

For a look at how stocks have done in the first year of a new Fed chair, click here.

What's moving?

The market was reacting to the Bernanke news, but also to a variety of other factors, said Peter Cardillo, chief market analyst at S.W. Bach & Co., including falling oil prices, the lack of economic news and the morning's spate of upbeat earnings.

Among Dow movers, American Express (up $2.39 to $49.54, Research) jumped more than 5 percent after it reported third-quarter earnings Monday afternoon that rose from a year ago and bested forecasts.

A number of big financial issues moved higher, boosting the Amex Securities Broker/Dealer (up 5.29 to 179.81, Charts) index by 3 percent.

Merck (up $0.82 to $27.00, Research) gained over 3 percent after reporting higher quarterly earnings that rose from a year earlier, with lower costs tempering the impact of its withdrawn arthritis treatment Vioxx.

It was one of many biotechs rising on the session, boosting the Amex Biotech (up 18.07 to 631.59, Charts) index by nearly 3 percent.

Grocery chain Albertsons (up $1.19 to $25.25, Research) rose 5 percent on news late Friday that it has received a preliminary takeover bid from rival Kroger (up $0.27 to $20.07, Research), while its pharmacy unit has drawn bids from three drug store chains.

On the downside, Cendant (down $1.32 to $18.77, Research) shares slipped after the company said it will split itself up into four publicly traded companies by 2006 in an effort to lift the price of its stock. The owner of travel, hotel and real estate services also warned that fourth quarter and full-year 2006 earnings won't meet forecasts.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by more than three to one on volume of 1.64 billion shares. On the Nasdaq, advancers beat decliners eleven to four as 1.58 billion shares changed hands.

U.S. light crude oil for December delivery slipped 31 cents to settle at $60.32 a barrel on the New York Mercantile Exchange, erasing bigger losses during the session. The price dropped as Gulf Coast facilities managed to avoid the fallout from Hurricane Wilma.

Treasury prices slipped, raising the yield on the 10-year note to 4.45 percent, up from 4.39 percent late Friday. Treasury prices and yields move in opposite directions.